Nirav Modi scam: Sebi warns PNB over delay in disclosures
MUMBAI: The Securities and Exchange Board of India (Sebi) on Thursday issued a warning letter to Punjab National Bank (PNB) for delaying disclosures with respect to the Nirav Modi scam, the company said in an exchange notification.
The regulator said that there was a delay of one-to-six days in making disclosures to the exchanges that they have filed a complaint with the Reserve Bank of India (RBI) and Central Bureau of Investigation (CBI) with respect to a scam involving the Nirav Modi group and the Gitanjali group.
PNB’S total exposure to the fraud entities stands at ₹14,356 crore.
According to the regulator, this delay in informing the stock exchanges is a violation of the Listing Obligation and Disclosure Requirements (LODR), according to which companies need to inform stock exchanges about any price sensitive information in a timely manner.
The regulator asked the bank to be careful in the future.
“Non-compliances are viewed seriously and PNB is hereby warned and advised to be cautious in future to ensure compliance with all applicable provisions of the SEBI LODR Regulations,” said the regulator in the letter.
PNB’S loss in the fourth quarter of 2017-18 was ₹13,416.9 crore, compared with a net profit of ₹261.9 crore in the year-ago period.
PNB in a disclosure to bourses in February and March said that it had come across fraudulent transactions worth ₹11,400 crore (it now stands at ₹14,356 crore).
“The administrative warning cautions the public sector bank not to delay material disclo- sures. It (Sebi) also seems to be pushing its wish to make banks more honest with their disclosure and recognition of bad or doubtful assets in line with its 4 August circular,” said Sandeep Parekh, managing partner, Finsec Law Advisors.
Parekh is referring to a the Securities and Exchange Board of India circular which mandated listed entities to disclose defaults within a day.
However, it was withdrawn on September 30 after representations from banks.
Currently the circular has been referred back to the Sebi board for consideration.